{"id":809654,"date":"2025-01-31T11:30:00","date_gmt":"2025-01-31T09:30:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=809654"},"modified":"2025-01-31T10:47:16","modified_gmt":"2025-01-31T08:47:16","slug":"south-african-property-experts-are-not-happy","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/property\/809654\/south-african-property-experts-are-not-happy\/","title":{"rendered":"South African property experts are not happy"},"content":{"rendered":"\n

The South African Reserve Bank\u2019s (SARB) latest interest rate cut has left the property market wanting more, as homeowners face rising costs like electricity and petrol hikes.<\/p>\n\n\n\n

While the 25 basis point reduction, bringing the repo rate down to 7.50% and the prime lending rate to 11%, is a welcome relief, industry experts argue that it falls short of providing substantial relief to struggling homeowners. <\/p>\n\n\n\n

The decision was largely expected, driven by declining inflation, which stood at just 3.0% in December, significantly below the SARB\u2019s midpoint target of 4.5%. <\/p>\n\n\n\n

However, despite this, economic risks remain, and the small reduction in borrowing costs does little to offset the mounting financial pressures faced by South Africans.<\/p>\n\n\n\n

The Monetary Policy Committee (MPC) vote was divided, with four members supporting the cut while two voted to keep rates unchanged. <\/p>\n\n\n\n

SARB Governor Lesetja Kganyago noted that inflation should remain below 4.5% for the first half of the year before rising again while also warning that US monetary policy remains uncertain, with the possibility of further rate hikes by the Federal Reserve. <\/p>\n\n\n\n

Meanwhile, South Africa\u2019s GDP contracted in the third quarter due to weak agricultural production, though a rebound is expected in the fourth quarter, supported by improved agricultural output and higher spending from two-pot retirement withdrawals. <\/p>\n\n\n\n

The SARB projects GDP growth reaching 2.0% by 2027, although sectors like mining and manufacturing remain below pre-pandemic levels.<\/p>\n\n\n\n

For homeowners, the impact of the interest rate cut is minimal. <\/p>\n\n\n\n

Berry Everitt, CEO of the Chas Everitt International group, points to the latest FNB Property Barometer, which reveals that 23% of current home sales are driven by financial distress. <\/p>\n\n\n\n

Additionally, Prudential Authority data indicates that 6% of homeowners are already in arrears with their home loans. <\/p>\n\n\n\n

Everitt notes that the rate cut will reduce the minimum monthly bond payment on a R1 million home loan by just R200, from around R10,500 to R10,300\u2014an amount unlikely to significantly ease financial burdens. <\/p>\n\n\n

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CEO of the Chas Everitt International group<\/em> Berry Everitt<\/em>.<\/figcaption><\/figure><\/div>\n\n\n

He warns that homeowners must look beyond short-term relief and prepare for potential future cost increases, including municipal rates and tax hikes, which could negate any benefits from the rate cut.<\/p>\n\n\n\n

Yael Geffen, CEO of Lew Geffen Sotheby\u2019s International Realty, echoes this sentiment, stating that the government is \u201cgiving with one hand and taking with the other.\u201d <\/p>\n\n\n\n

She highlights the upcoming 12.7% electricity tariff increase by Eskom, which will substantially raise utility bills for households and businesses alike. <\/p>\n\n\n\n

The rising cost of electricity, he argues, far outweighs the small benefit of the interest rate reduction.<\/p>\n\n\n\n

Geffen warns that businesses will pass on their increased operating expenses to consumers, further driving inflation. <\/p>\n\n\n\n

She also stresses that geopolitical risks, particularly shifting US foreign policies under Donald Trump\u2019s administration, pose additional economic uncertainty for South Africa. <\/p>\n\n\n\n

If the government does not address this diplomatic rift, she fears that the economy could suffer serious consequences despite internal efforts to stimulate growth.<\/p>\n\n\n

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CEO of Lew Geffen Sotheby\u2019s International Realty Yael Geffen.<\/em><\/figcaption><\/figure><\/div>\n\n\n

Samuel Seeff, chairman of the Seeff Property Group, believes the SARB should have made a more aggressive move. <\/p>\n\n\n\n

He argues that a 50 basis point cut would have had a much greater impact, especially given South Africa\u2019s high real interest rate relative to inflation. <\/p>\n\n\n\n

With the economy stagnating and unemployment remaining a major challenge, Seeff contends that the SARB\u2019s focus on inflation containment is outdated. <\/p>\n\n\n\n

Instead, he calls for bolder rate cuts to stimulate economic growth and job creation, citing historical precedents where significant rate reductions helped lift the economy during crises such as the COVID-19 pandemic.<\/p>\n\n\n\n

Despite these concerns, Seeff acknowledges that lower interest rates have provided some momentum to the property market, with sales volumes improving towards the end of last year. <\/p>\n\n\n\n

He advises buyers to take advantage of current conditions, particularly in Gauteng and other inland provinces where property stock remains high. <\/p>\n\n\n\n

If economic stability is maintained and growth picks up, he believes the real estate sector will perform better in the coming year.<\/p>\n\n\n\n

Overall, while the SARB\u2019s interest rate cut is a step in the right direction, it falls short of providing meaningful relief to South African consumers and businesses. <\/p>\n\n\n\n

With electricity tariffs rising, potential fuel price increases on the horizon, and persistent economic challenges, homeowners and property investors must navigate an increasingly complex financial landscape. <\/p>\n\n\n\n

The call for stronger policy interventions to drive economic growth and reduce unemployment remains loud, as the current trajectory offers little respite for those struggling to make ends meet.<\/p>\n\n\n

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Chairman of the Seeff Property Group Samuel Seeff.<\/em><\/figcaption><\/figure><\/div>","protected":false},"excerpt":{"rendered":"

Some of South Africa’s biggest property experts warn that the government is giving with one hand and taking with the other. <\/p>\n","protected":false},"author":92,"featured_media":669973,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12755],"tags":[20415,14700,3619,11693,853],"class_list":["post-809654","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-property","tag-chas-everitt-group","tag-lew-geffen-sothebys-international-realty","tag-sarb","tag-seeff-property-group","tag-south-africa"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/809654","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/92"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=809654"}],"version-history":[{"count":3,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/809654\/revisions"}],"predecessor-version":[{"id":809702,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/809654\/revisions\/809702"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/669973"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=809654"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=809654"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=809654"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}